To: t2 who wrote (82589 ) 11/28/1998 2:31:00 PM From: Jock Hutchinson Read Replies (2) | Respond to
What you and all the longs on this board fail to comprehend is the issue of ease of entry into the Internet market. And you can't have it both ways. Dell was, and is the early leader in PC sales over the Internet. But over time, that percentage lead is diminishing. After all, it isn't that difficult to set up an entire Internet substructure--certainly much easier than a "real world" structure that includes real estate, etc. So there is no question that there will be increased competition for Dell on its home turf--including from companies that do not make PCs, but have the enormous capability to market and finance a consumer's purchase, such as YHOO etc. Do you honestly think that Mike can keep his manufacturing costs down to where he can compete with Mainland China? Name one consumer electronics good whose production remained in the US over the past forty years after having started in the US. And like it or not, Dell PCs are a commodity--a commodity that is declining in price. So now the argument goes that Dell will get into other areas of the Internet. Yeah right--areas that are already becoming intensely crowded--areas that require little intellectual capital--in short areas where the barriers to entry are also nil. Do you or anyone else seriously believe that the margins for items sold over the Internet are going to be higher ultimately than items not sold over the Internet? Surely you must be kidding. Dell's forward looking growth will be 20 percent in the foreseeable future (3-5 years), and this stock is selling as if it will be 40 to 50 percent. Can you double the price of Dell in the next year? You bet. But looking forward for a three to five year period, this stock is tomorrow's has been. When will it tumble? I don't know, but when it does, it will lose more than fifty percent of its value over a period of less than two months.
